Markets: Bad Week All Round, More Ahead

According to Bloomberg, last week was the worst Thanksgiving week for US markets since 1932, when the Depression deepening after a string of bank collapses sent economies around the world plunging into a deep freeze.

The parallels might be apt in some minds, but so far we have been spared a rerun of 1932 and 2008 for that matter, but the eurozone banks are looking more and more exposed as the credit freeze spreads.

German, US, UK, Belgian, French and Australian bank stocks all suffered at the hands of nervous investors last week.

Even Chinese banks were sold down in Shanghai and in Hong Kong markets.

In the US

The Standard & Poor's 500 index slid 4.7% in the short trading week to close at 1,158.67 in Friday's half day, holiday dominated trading session.

The Dow fell 564.38 points, or 4.8%, to 11,231.78 and the Nasdaq was off a huge 5.1% last week.

For the year so far, the Dow is now down 3%, the S&P 500 is off 4.7% and the Nasdaq has lost 8%.

And the S&P 500 has lost 7.6% in November, with three trading days to go.

World stocks, measured by the MSCI All-World index lost half a per cent on Friday, but a rather large 5.3% over the week.

American markets shrugged off reasonably good news: the economy grew at 2% for the third quarter, down from the first estimate of 2.5%, jobless claims fell, but durable goods orders were weaker than expected.

European markets

Lost around 4.6% according to major indices such as the Stoxx 600.

Bloomberg said national benchmark indexes dropped in all of the 18 western-European markets.

France's CAC 40 Index fell 4.7%, the UK's FTSE 100 Index lost 3.7% and Germany's DAX Index lost 5.3%.

There was just no good news in Europe or the UK to encourage markets to halt their slides.

Bond yields are rising everywhere, except the UK; the economies of the EU are slowing, and some are in recession.

Industrial orders are slumping and this week we will have more of the same, with the added bad news of poor jobless figures for the region.

In Asia

Friday saw a big sell down. Australia's S&P/ASX 200 index shed 1.5%, Hong Kong's Hang Seng Index lost 1.3%, South Korea's Kospi lost 0.8% and China's Shanghai Composite fell 0.6%.

Japan's Nikkei Stock Average traded flat, remaining near two-and-a-half year lows.

For the week, Australia was down a nasty 4.6%, Shanghai lost 1.7%, Tokyo lost 2.6% and Hong Kong was off 4.3%.

In Australia

The local market will open flat to slightly weaker after the soft half day trading session on Wall Street.

The share price futures contract showed a 5 point rise on Saturday morning to 4008, which is nothing to inspire confidence about the week ahead.

The dollar regained the 97 USc mark and closed at around 97.11 in New York, up from Friday's local close of just under 97c.

On Friday, the ASX200 fell 59.9 points, or 1.5%, to 3984.3, its sixth straight losing session and falling below the mark of 4000 points for the first time since October 5.

The All Ords index lost 57.7 points, or 1.4%, to 4057.6.

The 4.6% loss for the week was the worst for two months. Around $80 billion was cut from the market's value last week.

Like overseas, banks and resource stocks lost ground on Friday and last week.

The CBA was hit hardest, shedding 2.6%, while BHP fell another 1.4% to $34.05, jut above its year low of $33.86. Rio dropped 0.7% to $61.95.

Shares in Woodside Petroleum dropped as much as 9% after its production forecast fell short of market expectations. It closed down 5.8% at $33.36 after the quarterly update.

Retailers continued to suffer.

Department store rivals both fell: David Jones by 4.6% and Myer lost 2.6% after confirming its forecast for a 10% slide in profit this year, at its AGM.

Watch for more retailing updates at the AGMs of Harvey Norman, OrotonGroup and Premier Investments (Just Group) this week.

And we also get retail sales figures for October from the Bureau of Stats.

And there was nothing from commodities to offset the gloom in equities and bonds.

Many investors in commodities still live in the belief that the eurozone governments will 'do something' to halt the drift.

The various governments will probably be forced into doing something drastic at the very last minute, but it won't halt the slide into recession.

Coupled with the continuing slowing in the Chinese economy, industrial commodities face more downward pressure, with precious metals also facing bouts of selling as investors liquidate their holdings to raise cash to ride out the growing credit winter in EU markets.

We've seen this increase volatility in all markets, especially gold and silver since August.

Last week though was a bit calmer for gold.

Comex gold futures ended lower in New York on Friday, losing $US10.20 or 0.6%, to settle at $US1,685.70 an ounce.

Over the week, gold lost 2.3%.

Marketwatch reported that Credit Agricole analyst Robin Bhar told clients in a note,"Gold prices could still gap in either direction depending upon events in the euro zone and the fortunes of the U.S. dollar, which remains the safe haven of choice amid a flight to safety, quality and liquidity" .

Bhar cautioned that gold prices could potentially ease back to the $US1,650 per ounce level, if global markets face a liquidity squeeze that prompts further liquidation and margin selling.

"Gold is under-performing as investors are more concerned about return of capital rather than the return on capital, a situation last seen during the great financial crisis of 2008-2009," Bhar said.

Other metals followed gold down.

And silver again bore the brunt of the losses.

Comex December silver fell 87c, or 2.7%, to $US31.01 an ounce.

That took the loss for the week to 4.3%, after the 6.5% fall the week before.

That means silver is now in a correction phase where the price falls 10% or more from its previous high.

Comex December copper eased a cent on Friday to end at $US3.27 a pound, a loss of 3.8% for the week.

Copper investors will be watching the update on Chinese manufacturing on Thursday for leads as to what is happening in the biggest consumer of the metal.

And crude-oil futures ended Friday higher.

Nymex WTI crude for January delivery added 60c, or 0.6%, to settle at $US96.77 a barrel.

Over the week oil lost 0.7%.

In London Brent oil for January settlement fell $US1.38, or 1.3%, to $US106.40 a barrel in London.

Trading in all commodities was light because of the half day holiday in the US and the high levels of fear in European markets.